Thursday, November 10, 2011

To Do List

Monday, November 07, 2011

Upward Mobility Followup

This is a follow-up to yesterday's message about Time's cover article on upward mobility. It discusses in a little more detail 3 of the issues I raised.

Issue #1: America is awash in material wealth. That's what I said yesterday, but simply saying so doesn't really underline just how dramatically it's true, so here's a visual to go with it. And here, if the internet gods are smiling upon us today, is the image it leads you to:

It shows that each American state (yes, each one individually) has a Gross Domestic Product (GDP) on a par with some entire nation elsewhere in the world. We think of Saudi Arabia as being oil-rich; ordinary old Tennessee matches it. The single state of California, for all its fiscal woes, cranks out as many goods and services in one year as France, with the 2nd largest economy in Europe. Even lowly Mississippi* matches Chile, one of the most successful nations in South America.

So when I said that America is awash in material wealth, I was vastly understating the case.

Issue #2: Much of our prosperity came from exploiting the resources of a virgin continent. That’s true, but the free ride is coming to an end. Half of Iowa’s rich topsoil has eroded away down to the Gulf of Mexico. The Ogallala Aquifer, whose irrigational capabilities prompted us to relabel the Great American Desert as America’s Breadbasket, is being steadily drained. The Great Lakes, the largest source of fresh water in the world, are lowering and becoming more and more polluted and infested with invasive species. The Colorado River, mighty enuf to have carved out the Grand Canyon, has been sucked dry before it can flow into the Gulf of California. Wisconsin has lost half of its biodiverse wetlands.

And then there’s oil. As an astute high-school classmate of mine pointed out, “… cheap energy [is] a resource now becoming more expensive. The Texas gushers of the 1920s returned 100 units of energy for every unit expended. The US is now somewhere in the 10:1 range. The deeper drilling has to go, the more energy is required to get the oil out.”

These problems will not be resolved by the money guys. If somebody shows up with a bushel basket fulla benjamins, it’s not gonna water your corn crop. No, these problems will be resolved by science, technological innovation, and, yes, entrepreneurial ability, which should be justly rewarded.

As to what constitutes a just reward, I point to 3 sterling examples: • George Washington Carver, who invented a hundred different uses for the common peanut and gave birth to an entire branch of agriculture. • Tim Berners-Lee, inventor of the World Wide Web. • Dean Kamen, best known for his Segway scooter, but whose latest device, the Slingshot, will bring cheap water purification to the parts of the world which most desperately need it.

These creators received far more reward in the form of respect and admiration than they did in the form of money. The proceeds from their discoveries and inventions made them comfortably well off, but none of them were what we’d call filthy rich.

Of those who are filthy rich, the oil zillionaire H. L. Hunt admitted that “It’s not about the money, it’s about the power. Money is just a way of keeping score.”

What we need is a different way of keeping score, and Bill Gates** has proposed one: How much money can you give away? John D. Rockefeller, Andrew Carnegie, Henry Ford, Andrew Mellon, Joseph Pulitzer, Alfred Nobel, Alfred P. Sloan, John D. and Catherine T. MacArthur, and Annie E. Casey all created foundations to use their personal fortunes for good. So has Gates, and he’s been joined by America’s 2nd richest person, investor Warren Buffett.***

So all praise to those who share, and a burning bag of dog poop for the greedy bastards who just want more, more, more all for themselves.

Issue #3: The rich did not create most of their wealth, society did. The nation's foremost advocate of consumer protection from the depredations of the big banks and money moguls is Elizabeth Warren. She came up with the idea of the newly created federal Consumer Financial Protection Bureau, a watchdog agency and advocate for the common person. She would have been the logical person to head it up, too, except that her nomination was stone-walled by the bought-and-paid-for Republican senators who would have filibustered her confirmation.

So instead she's running for Ted Kennedy's old Senate seat from Massachusetts. As part of her campaign, she appeared at a house party to talk to early supporters, and in an off-the-cuff address she made many of the same points I did about who really built America. "There is nobody in this country who got rich on his own", she correctly observes. While she didn't overtly connect this observation to the next dot, I will cheerfully do so: It's the people who really do the work who really deserve the rewards.

––––––*Unofficial state motto of Alabama: "At least we're not Mississippi"**Actually, since he didn’t adopt this approach until after he’d married Melinda French, I may be misattributing the source of the idea.***Buffett famously testified before Congress that he wants his taxes raised, wondering publicly why his secretary should have to pay a higher effective tax rate than he does.

Sunday, November 06, 2011

Upward Mobility

The cover story speaks of the loss of dirty, dangerous, back-breaking, mind-numbing routine manufacturing, mining, and agricultural jobs in America as if it’s a bad thing. I, on the other hand, applaud it as progress (altho we’ve reacted to it badly). No less a capitalist than Bill Gates remarked that "One-dimensional, repetitive work is exactly what computers, robots, and other machines are best at — and what human workers are poorly suited to and almost uniformly despise." (Business @ the Speed of Thought, 1999)

Consider that Jefferson’s ideal citizen, the “sturdy yeoman farmer”, had to labor long, hard hours in the fields, and it took 20 of them to produce enuf food to support 1 city dweller. By the end of the 20th Century, that ratio had been reversed, with 1 farmer able to feed 20 other people. Do the math: That’s agricultural progress by a factor of 400.

Or look at education at opposite ends of the 20th Century. At its beginning, the percentage of the population that had graduated from high school was lower than the percentage of college graduates by its end.

Or housework. Just because it wasn’t paid didn’t mean it wasn’t work — and hard work at that, time consuming and stultifying. But then after WW2 we had “labor-saving devices” such as electric ovens, refrigerators, vacuum cleaners, and sewing machines, and that freed up housewives for part-time work. In the ensuing decades we further off-loaded (some would say outsourced) additional household tasks with ready-to-wear apparel, take-out food, and day-care centers, and women could join the work force full time. The result — tapping the full potential of the previously underutilized female half of our population — led to the greatest economic growth spurt in history.

There’s no great secret to economic growth. Quite the contrary, the reason is so obvious it almost always goes without saying, so nobody says it. Let me be explicit: Stuff piles up! Work we did a year ago, a decade ago, a century ago is still paying dividends today.

For example, in 1988 I moved into a small house, vintage 1920s, which is modest by American standards but provides me with shelter that would have been (literally) unimaginably luxurious to the wealthiest royals of antiquity. Electric lights! Indoor plumbing! Cable TV! Shampoo! Year-round fresh-squeezed orange juice! Yes, it costs me a mortgage payment, insurance, taxes, and upkeep, but it’s the functional equivalent of my own private palace. I’m a king in my castle, and I can afford it thanks to my being the beneficiary of an incredibly prosperous society.

And think of all the grief and time having my own house has spared me. At the very least, I don’t have to find a new cave every couple of nights as I follow the reindeer herd across the tundra to avoid starvation. I gain this benefit — as do millions of other Americans — because the generations which have gone before have built sturdily and left us stuff that makes our comfortable lives possible.

Because all of my basic bodily needs are easily and inexpensively taken care of, my time, energy, and creativity are freed up to do many other, more worthwhile things. And so with everyone else as well. Yay! Nobody can honestly contend that America would have been better off if Henry Ford, Aretha Franklin, or Steve Jobs had been required to chop firewood and dig potatoes every day just to keep body and soul together.

And this speaks only of material comforts, saying nothing about the greatest cumulative benefit of all: knowledge. As Newton said of Galileo: “If I have seen farther than other men, it is because I have stood on the shoulders of giants.” So have we all! Our curiosity and our gift for passing knowledge on to our children thru the amazing tool of language — both spoken and written — constitute our great evolutionary advantage over the other animals and are what have made civilization possible.

I mention this because there are people in our society who look at their paychecks and figure that, just because their name appears on the 1st line, they have somehow or other created the wealth enumerated on the 2nd line, instead of inheriting most of it. They refer to the money as their just due, the fruits of their labor, and claim exclusive ownership of it as rightfully theirs.

To put this attitude into perspective, I propose the following thot experiment. Let Bob Bighedd add up his total income for the last 5 years; call the resultant amount X. Let him also add up all the taxes he's paid during that same period; call it Y. Now hie him off to, oh, say, northern Uzbekistan or Burkino Faso, places notably devoid of multinational corporations and computers, where he can ply his trade of software entrepreneur for the next 5 years; income therefrom is called Z. (I assume, arguendo, that his talent, effort, and entrepreneurial ability remain constant compared to the previous 5 years, and I’ll spot him a native-speaker working knowledge of the local language.)

It is my contention that X, earned while Bob is embedded in a modern materialistic society, will be hugely larger than Z, where he's pretty much on his own. Further, I believe that even X–Y will be substantially greater than Z. That is, if we take Z to be the personal component of Bob's labor, attributable to his efforts alone, then X–Z represents the added amount that the social context — including tax-supported public schools, interstate highways, a reliable electric grid, a baksheesh-free system of enforcing contracts, and computer-savvy software buyers — has contributed to his production. The issue of fairness, then, comes down to whether the social component of his output, X–Z, is larger than his taxes, Y. If so, then our society, far from stealing from him, as the anti-tax crowd contends, is actually heaping benefits upon him. In a truly fair world, society should be claiming 3/4 of Bob’s income (the part which the social context is responsible for), not the mere 1/4 it actually gets.

So now let’s return to the subject of upward mobility. America is awash in material wealth, mostly because our ancestors stumbled upon a virgin continent and exploited the daylights out of its resources, and also because we have (mostly) avoided the home-soil wars that would have destroyed what they’d built. (IOW, stuff continued to pile up.) There is plenty of money to go around. Unfortunately, it isn’t actually going around; it’s being socked away by the incredibly rich and incredibly unproductive — people who have made most of “their” money by gambling with other people’s and skimming their take off the top, win, lose, or draw — and they’ve been able to buy enuf Congresscritters and Supreme Court justices to make their greedy practices legal.

This unbridled greed is undercutting the very thing which made the American Dream possible: ordinary people continuing to demand — and therefore supply — more stuff.

It’s a fundament of economics that the health of an economy isn’t so much a function of the total amount of money in it as of the speed with which it circulates. A million bucks that buys one luxury yacht doesn’t work nearly as hard as that same million bucks in the hands of a thousand regular people, who will then spend it on groceries, and the grocers will spend it on shipping, and the distributors will spend it on gasoline, and so on. Frequent spending, not merely big spending, is what makes the economy grow. To my own dismay, I quote with approval George W. Bush’s advice in the aftermath of 9/11: Go shopping!

As a science-fiction fan, I can envision a future when hardly anybody has to work, when mechanization and computerization deal with all the drudgerous, dangerous, dull tasks, and we humans are freed up to do what humans do best — create, innovate, learn, and enjoy. This is far from a pipe dream. In fact, half of our population — children, college students, and retirees — are already there.

For the other half of the population, the 150 million Americans in the work force, this goal of less work per person also provides the solution to our current employment crisis. 10% of workers are unemployed, and another 10% are under-employed. Redefine the standard work week as 32 hours instead of 40 (and make sure it sticks by requiring double pay for work beyond 32 hours). Presto! 20% more jobs open up, absorbing all of the people who’d like to improve their current situation. More money gets spread around, demand for stuff increases, production follows, and the economy is back on track.

We can easily finance this transition just by taking the money from the places where it’s currently stagnating. Run up the tax rates on high incomes, on capital gains, on inheritances, on imports, on no-value-added financial transactions; spend much of that increased tax revenue on such long-term investments as infrastructure, education, and preventive health care; and we would quickly redistribute the benefits of production to the people who are actually doing the production.

I do not begrudge the Wall Street tycoons, bankers, and hedge-fund managers their fair share of the pie, no more than I do some poor homeless PTSD vet, but they are obscenely beyond their fair share. They’re hogging so much of society’s accumulated wealth that they’re dragging the whole country down and making life way too miserable for way too many of their fellow citizens.

It is our country as a whole that piled up all this stuff that constitutes our inheritance, it should be the country as a whole that gets to enjoy it. And, by doing so responsibly and continuing to build on (and with) what we’ve inherited, we do our part to make life even better for the generations to come.

Martin Luther King said he had a dream “deeply rooted in the American dream”. His was achievable; so is the greater dream. Both dreams are fiercely opposed by empathy-free, reactionary vested interests, but, as Dr. King also noted, “The arc of the moral universe is long, but it bends towards justice.”

= = = = = ="The future is already here. It is just not uniformly distributed." — William Gibson